Chevron CEO's Take on the Energy Market

10/6/2010 6:42PM

Chevron CEO John Watson discusses global energy needs for the future, as well as the balance of fossil fuels and alternative energy, in an interview with Alan Murray at WSJ's inaugural Viewpoints West series.

This transcript has been automatically generated and may not be 100% accurate.

I ... see you both agree with the notion that we do the overtime ... sales also fell ... I think we're nearly all forms of energy for a long period of time ... I think the fossil fuels ... have been instrumental in creating the ball to live we have today ... to think that the modern ... hundred and twenty years ... it was very high quality of life in a state soaring in Europe ... and the OECD countries fossil fuels been instrumental ... in giving us a stand when we have today ... and around the world ... of billions of people are aspiring to that same standard of living ... and fossil fuels have the advantage of being quite affordable ... so I think it's going to be a long path of transition ... onto new fuels and we will transition off of ... those deals where they can take a lot more time also let's talk about how long I mean how long will it take to say get to the point where ... fossil fuels or providing less than fifty percent of our ... they never see that he should think in terms of generations ... of the most a hundred years ... a good day ... I made a hundred years to be less than fifty percent ... but if you think about possible aggressive policies of present Obama has ... put in place for is seeking to put in place ... by two thousand thirty ... of fossil fuels will still provide seventy percent of the world's energy in all those things come true ... bizarre in the area is out of production in years and that's the best you can ... that's what others are saying is a mess that will happen now there are those including some in the room ... there was a bit then we can move more aggressively ... oh I know I would target the cycle time the Kabel's stock turnover ... tends to be long ... this business is issue huge business in making energy ... officially unaffordable at scale ... is very difficult so your best guess twenty thirty based on what you know you know lot more ... about what's happening in the market today than most your best guess ... percentage of our energy needs coming from fossil fuels and one for ... seventy percent ... seventy percent you think you can make at least ... from ... a ... year worldwide ... worldwide ... if anyone can help us make this transition is clearly companies like yours to use and I think are spending twenty in ... Morton twenty one billion dollars in capital ... in the next year how much about capital or new spending on renewable ... and ... while lead over the next three years and as usual our expenditures will be over two million dollars on on ruble's over the next three years ... and um so in this in the Indian grand scheme of things chairman and largest fertilizer producer ... of crude to put the scale of our business in perspective ... geothermal dozens of people don't even know we have ... in Indonesia and the Philippines produces more power ... more electricity ... than all the solar power in this country ... so the scale of our business is very large and it's facing numerous investments to get their ... soul that were nobles contributions ... will will get there but right now we're talking three four percent of ... a contestant in a ... very low and one charge for people with how ... we take risks all the time ... when gospel ration wells and one for one in five chance of success so we're willing to do that ... and more making investments with adventures organization or investing in some companies in the twenty representing the room ... so when to invest in those technologies ... we don't do profitably ... and it's going to take on ... when we have of partnerships in investments that were making ... in biofuels to try and during the next generation ... but some cities and scale are not a recipe for success ... on energy ... we've seen what's happened with corn based ethanol over many years where ... it's been a good program to support farm incomes ... but haven't necessarily produce logo and see ... was your worst ... well we know you're not in us and ... I went on to the owner of the few fuel base so no we don't do was say we don't do when they sell ethanol we don't think it's wise land use ... and so while we were choosing ... to invest in the fields where ... our number one we can find the right feedstock that will have less of an impact on land use ... and be more efficient ... conversion pointing you can find the right conversion technology and to a scale by one of returner senior point about subsidies because you have wind farms you just got approval the bill The Big Solarfun Maisel all those get subsidies ... some of them do some of them or ... I was on call them tests ... that we were testing technologies such as down in Bakersfield it but there are fairly they're fairly small ... you consider the subsidies inner economic analysis in your decision whether to go ahead with a capital profit on course and when it's been ... so ... you may be led by subsidies to do some things that you think our Toblerone we will not make major investments in sectors where the business is dependent ... on subsidies and Alt A y ... because ... eventually ... it gets figured out in the subsidies give removing an innings and ... Spain ... Spain's been two percent of GDP ... investing Euro Nobel's over the last decade ... some thirty six billion dollars ... and are now on warning many of those subsidies ... and for all the green jobs created ... their university this and they destroyed two other jobs ... so the idea that you can subsidize were replacing cheaper form of energy ... with a more expensive form of energy somehow that's going to benefit society ... particular time but I pocketbooks of the consumer level ... and the government ... is not a recipe ... now ... that doesn't mean we should make investments and are disinvestments and can have some to subsidize selectively ... but subsidies a scale or a very tough recipe ... so from where you sit you can you you have investments and when you have investments in solar you have some investments ... of biofuels although I think of as much as some of the other majors ... um you work your your your doing fundamental research investing in ... a more far sighted A ... projects ... if you take the long view ... um don't think about where we need to be and twenty thirty or even beyond twenty thirty ... what do you see in that portfolio that really excite you can really stay all ... and it can really make a dent in ... supplying energy needs of society ... well been the biggest thing that we can make that I can help whether goals Carmen for affordable energy or the investors were making a natural gas ... business ... I just returned from Australia last week ... and no ... we win I'll miss the decision will Forte on the Gorgon LNG project which interesting Lee enough is being constructed in a nature reserve ... in Australia ... and that will have three big trends of Ellen G ... up to thirty seven billion dollar project ... in over natural gas to Asian customers ... that shows you the kind of scale to your say Mirel and for the medium term is not for Nobel's but natural that was when you all know yet but no Novozymes ... the ones that can stay Olam that are big enough to make a dent in those percentage in one of the main reason to make a dent in the energy name of the world over the next twenty years are likely to be traditional sources ... write down the expectation is that energy demand will grow forty percent ... between now and two thousand third ... a lot of that growth will be in China and developing countries of Asia there are those of thinking they do in faster ... because we keep inventing devices in demand ... that will consume more energy and so when you need to have more forms of energy ... among ... oil and gas ... and coal to China and some other developing countries will play the Browner also had you reconcile that ... your understanding of the situation and how we have to get to the future what what you hear ... in terms of public policy or public discussion frankly I mean it ... oh you large number of intelligent people who think we need to wean ourselves from Fossil ... why I dislike of a balanced discussion on the subject so we talk about the costs talk about affordability talk about ... the objectives that times are competing ... so in the same breath that people are talking about getting or stalls offer well when you talk about the timescale that's involved ... in the need to talk about what the other requirements of our energy system are ... of people who want affordable fuels businesses need affordable fuels to compete ... Renault's Fernando injustices seven a half percent of GDP ... in this country can provide good jobs ... and so it's providing energy need an affordable price to enable or businesses to compete ... consumers have the things they want the price they can afford ... all also the wealthiest nations on the ones that have the highest environmental standards ... can you get there by having ... a cost competitive businesses so there's a role for energy deployed to the role for oil and gas play ... and it's that balance I think what would it would open discussion ...